Why You Might Be Interested In HYUNDAI CORPORATION HOLDINGS Co., Ltd. (KRX:227840) For Its Upcoming Dividend
It looks like HYUNDAI CORPORATION HOLDINGS Co., Ltd. (KRX:227840) is about to go ex-dividend in the next 3 days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Therefore, if you purchase HYUNDAI CORPORATION HOLDINGS' shares on or after the 29th of December, you won't be eligible to receive the dividend, when it is paid on the 10th of April.
The company's next dividend payment will be ₩500.00 per share. Last year, in total, the company distributed ₩500 to shareholders. Based on the last year's worth of payments, HYUNDAI CORPORATION HOLDINGS has a trailing yield of 3.9% on the current stock price of ₩12700.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether HYUNDAI CORPORATION HOLDINGS can afford its dividend, and if the dividend could grow.
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. HYUNDAI CORPORATION HOLDINGS has a low and conservative payout ratio of just 13% of its income after tax. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. What's good is that dividends were well covered by free cash flow, with the company paying out 21% of its cash flow last year.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
See our latest analysis for HYUNDAI CORPORATION HOLDINGS
Click here to see how much of its profit HYUNDAI CORPORATION HOLDINGS paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see HYUNDAI CORPORATION HOLDINGS has grown its earnings rapidly, up 27% a year for the past five years. HYUNDAI CORPORATION HOLDINGS earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. HYUNDAI CORPORATION HOLDINGS's dividend payments are effectively flat on where they were six years ago.
Final Takeaway
Is HYUNDAI CORPORATION HOLDINGS worth buying for its dividend? HYUNDAI CORPORATION HOLDINGS has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. HYUNDAI CORPORATION HOLDINGS looks solid on this analysis overall, and we'd definitely consider investigating it more closely.
In light of that, while HYUNDAI CORPORATION HOLDINGS has an appealing dividend, it's worth knowing the risks involved with this stock. Every company has risks, and we've spotted 1 warning sign for HYUNDAI CORPORATION HOLDINGS you should know about.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.